FX:Crude oil declines as global growth concerns weigh ahead of ECB
Forexpros - Crude oil futures edged lower during European morning hours on Wednesday, as growing concerns over the health of the global economy weighed on appetite for growth-linked assets.
Investors also turned cautious ahead of the European Central Bank's policy meeting on Thursday and U.S. jobs data on Friday.
On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD95.22 a barrel during European morning trade, easing down 0.1%.
Prices were stuck in a tight trading range of USD95.06 a barrel, the daily low and a session high of USD95.48 a barrel. New York-traded crude prices rose to USD97.36 a barrel on Tuesday, the highest since August 27.
Data released Tuesday showed that manufacturing activity in the U.S. contracted for the third consecutive month in August, fuelling concerns over the health of the world’s largest economy.
The gloomy manufacturing data came a day after a report showed that manufacturing activity in China fell to the lowest level in three years last month, while the euro zone’s manufacturing sector contracted for the 13th month in a row in August.
Oil traders often use manufacturing numbers as indicators for future fuel demand growth.
Investors were jittery ahead of the ECB’s policy meeting on Thursday, at which President Mario Draghi was expected to announce details of measures to help stabilize the region’s sovereign debt markets.
ECB President Mario Draghi told European lawmakers on Monday that purchases of short-term sovereign bonds to help debt-burdened countries like Spain and Italy would not breach European Union rules.
Market sentiment remained vulnerable however, amid growing fears that the central bank may disappoint.
Meanwhile, market participants also looked ahead to Friday’s crucial U.S. non-farm payrolls data, which will allow investors to gauge the strength of the labor market and the need for additional easing by the Federal Reserve.
A disappointing jobs report could influence the Fed’s decision at its next policy meeting starting on September 12.
Mounting speculation the U.S. central bank was moving closer to introducing fresh measures to stimulate growth in the U.S. economy has helped support market sentiment in recent sessions.
Oil traders were also anticipating fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.
The American Petroleum Institute will release its inventories report later in the day, while Thursday’s government report could show crude stockpiles fell by 5.2 million barrels.
The report comes out a day later than usual due to Monday’s U.S. Labor Day Holiday.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery eased up 0.1% to trade at USD114.28 a barrel, with the spread between the Brent and crude contracts standing at USD19.06 a barrel.
London-traded Brent prices rallied to USD116.60 a barrel on Tuesday, the highest since May 3.
Brent prices have been well-supported in recent months, rallying nearly 22% from the lows touched in June, amid growing concerns over tightening supplies from the North Sea region and following the launch of Western-led sanctions targeting Iranian oil exports on July 1.
